Federal Reserve chair Jerome Powell said the government body is moving forward with research to implement a central bank digital currency.
In an announcement from the Fed today, Powell said the Federal Reserve Board would be issuing a discussion paper sometime this summer, calling for the U.S. public to comment “on issues related to payments, financial inclusion, data privacy, and information security.” While the Fed chair said crypto was not a “convenient way to make payments” given its volatility, he was seemingly more open to stablecoins and a central bank digital currency, or CBDC.
“Our key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system,” said Powell. “We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks."
According to Powell, designing a CBDC in the United States would require input from the public and elected officials, given that it raises “important monetary policy, financial stability, consumer protection, legal, and privacy considerations.” The proposed discussion paper would complement the Fed’s research into the risks and benefits of issuing a digital dollar, which has been ongoing for the last several years.
He added:
“Irrespective of the conclusion we ultimately reach, we expect to play a leading role in developing international standards for CBDCs, engaging actively with central banks in other jurisdictions as well as regulators and supervisors here in the United States throughout that process.”
Powell has spoken extensively about the possible ramifications of the United States releasing a CBDC, stressing that he believed it was more important “to get it right than it is to be first.” In February, he hinted that prior to a digital dollar rollout the Fed would “engage with the public pretty actively,” but did not rule out the project first going to lawmakers.